MEMORANDA BETWEEN HIS EXCELLENCY

A.—No. 4.

6

«uch Debentures to bear interest at the rate of 4 per cent, per annum, and to be taken by the Imperial Government towards liquidation of the debt due from this Colony to the Imperial Government. You will be good enough to place yourselves in communication with the Imperial Government, and arrange for making the Debentures in such form and for such amounts, &c, as may best suit their views ; the interest may be made payable in London at the Crown Agents' Office. The interest and the sinking fund provided by the " Loan Act, 1863," will be remitted in due course. In the Order in Council, dated 29th December, 1864, (a copy of which was transmitted to you in the letter before referred to) the Governor, in pursuance of the " Eate of Interest Act, 1864," ordered that the rate of interest on monies to be hereafter from time to time borrowed under the " New Zealand Loan Act, 1863," may be raised to 6 per cent., and you are therefore not precluded from issuing Debentures at a less rate of interest. I have, &c, Messrs. Julyan & Sargeaunt, William Fitzherbeet, Crown Agents for the Colonies, For the Colonial Secretary. Spring Gardens, London.

No. 7. MEMOEANDUM by Ministers. Ministers have learned from the Governor's Despatch to the Eight Honourable the Secretary of State for the Colonies, of the 7th January, 1865, No.' 10 (which was laid before them on the 3rd inst.), that His Excellency is desirous of receiving a formal statement of their views with regard to the defence of the Colony. Her Majesty's Secretary of State has pointed out the futility of any expectation on the part of the Colony that Imperial troops will be retained in New Zealand unless upon terms which it is impossible for the Colony to accept. On the other hand, the Legislature has urged the withdrawal of the troops at the earliest practicable period, and has expressed its determination to make every possible effort to place the Colony in a position of defence against internal aggression. Mr. Weld, the present Premier, before assuming office, submitted certain propositions for the acceptance of His Excellency the Governor, in the following terms ■ — " Mr. Weld is of opinion that the system of double Government by Governor and Ministers has resulted in evil to both races of Her Majesty's subjects in New Zealand. He recognises the right of the Home Government to insist upon the maintenance of this system so long as the Colony is receiving the aid of British troops for the suppression of internal disturbances : he is prepared to accept the alternative, and will recommend the Assembly to request the Home Government to withdraw the whole of its land force from the Colony, and to issue such instructions to the Governor as may enable him to be guided entirely by the recommendations of his Constitutional Advisers, excepting only upon such matters as may directly concern Imperial interests and the prerogatives of the Crown. " Mr. Weld is aware that the Governor, before taking action upon a proposition which would change the whole aspect of the relations between the Mother Country and the Colony, may probably feel it his duty to ascertain the views of Her Majesty's Home Government. He would therefore, pending their decision, recommend that the Colonial Parliament should undertake a reasonable liability for the services of troops actively engaged in the field at the especial recommendation of His Excellency's Ministers, and for such troops only. " Mr. Weld would recommend that a small standing Colonial Force be kept on foot, armed and trained with special reference to the nature of the service required." These propositions were laid before both Houses of the Legislature during the ensuing Session, and Ministers, in advising His Excellency the Governor during the recess, have carefully kept in view this cardinal feature of their policy. On taking office, they found districts somewhat advanced and difficult of defence in the occupation of the Imperial troops and of military settlers. It would have been impossible to withdraw from any of these positions without a confession of weakness, and risk of consequent disaster. They also found the settlements of Wanganui and Taranaki in a position of difficulty and danger, —and between them a district which was the rallying point of disaffection and the nursery of fanatical propagandism. Ministers at once advised His Excellency the Governor to issue the Proclamation of December 17th, 1864. Their policy was, not to continue aggressive warfare, but to settle the country already held by the troops; to identify the friendly natives as far as possible with their European fellowcitizens, by the issue of Crown grants and certificates to them for land, and by measures generally calculated to improve the condition of the native race ; to open the country by roads as occasion might serve ; and to secure the safety of the settlements of Taranaki and Wanganui by making a road, and by securing a military post or posts in the intervening hostile districts. Ministers believe the success of their policy to depend upon the willingness of the European settlers, and of those natives who live amongst them, to come forward in self-defence, aided, for a time at least, by an armed Constabulary Force under the direction of the Civil Government. They are of opinion, that the Pro\ince of Auckland, for instance, having a population of about 42,000 inhabitants, besides a very large proportion of friendly natives, ought to be in a position to ward off any attack from the comparatively small and badly armed force which might be brought against it. Ministers are aware that disasters to settlers in exposed positions may at times occur ; but such disasters have not been prevented by the presence of Imperial armies—nor could they, were those forces doubled. Ministers do not overlook the fact, that the permanent peace and safety of the Colony can only be secured by a course of policy which shall guarantee to our fellow-subjects of the Native race civil rights, and at the same time bring them under the control of law. It is then proposed, with the sanction of the General Assembly, to establish an armed Constabulary Force, to occupy defensive posts, to be supported, as occasion may require, by friendly native*,